The UK money supply has been increasing between 10% and 14% every year for the last 10 years. This increase has been via lending. True inflation is the money supply less growth. Growth is typically 2-3% - therefore inflation is running around 8-10% per year.
CPI is a work of fiction - a politically expedient lie.
Stock market growth... Simply inflation.
Housing growth... Simply inflation.
Commodity increases... Simply inflation.
Money supply increasing at 10% is a doubling of the money supply every 7 years. Is there twice as many cars, computers, roads, houses, businesses as 7 years ago of course not.
If real inflation is running at 8% and your salary is not going up at 8% or more then you are loosing out.
If real inflation is running at 8% and your bank pays 6% on your savings, you are loosing out.
Its a transfer of wealth from you to the markets.
Its going on all the time - Most people dont realise so they dont mind.
Yes - Bankers have made a fortune from the liquidity boom (facilitating this inflation through lending).
Yes Bonuses encourage short-termism
But ultimately it is the government who are responsible for the control of the money
supply not bankers.
nultygoestopartick
Should the government then take responsibility for interest rates rather than the BoE as was the case in the 80's?
If they were to set high interest rates it would kill off industry as the Thatcher and Keith Joseph did.